You should use the money in your savings account to pay for qualified medical expenses
. Money you spend on qualified medical expenses will not be taxed
. If you use money from your Medical Savings Account for anything else, you will be expected to pay income tax
on that amount.
There are two types of qualified medical expenses:
- Those that count toward your deductible. These include medical and hospital services that are covered under Medicare Parts A and B, like hospital stays, doctorsí visits, durable medical equipment, or home health and skilled nursing care. You must follow plan rules for coverage for the expense to count toward your deductible.
- Those that do not count toward your deductible. These are other medical expenses that are not covered by Medicare Parts A or B, including dental care, vision care, or your Medicare Part D prescription drug premium, deductible and coinsurance.
Note: You can use the money in your MSA account for non-medical expenses, like groceries and utilities, but the amount you spend for these non-medical purposes will not count towards your deductible and will be considered taxable income.
To find out more about what is a qualified medical expense for tax purposes, click on the link in the LINKS box.